EM.TV boosts revenue 25%, but not profits


COLOGNE, Germany -- German media group EM.TV continues to pump up revenue, but profits remain somewhat elusive.

In its third-quarter financial report released Tuesday, the company, which operates German sports channel DSF and holds one of the world's largest libraries of children's programming, said it boosted revenue by almost 25% to €57.5 million ($73.7 million).

But in the bottom line column, EM.TV managed only a slim €100,000 ($128,000) profit. That was better than the €4.6 million it lost in the third-quarter last yeat, but still a disappointment for shareholders.

EM.TV shares fell 2.1% Tuesday to €3.70 ($4.74) on Tuesday after going as low as €3.55.

"Our hopes for EM.TV have not been fulfilled," said Wolfgang Hagl, an analyst with investment publication Boerse Online. "Despite holding the merchandising rights to the 2006 World Cup, EM.TV has made little progress in terms of profits. On the positive side, the company is sticking with its long-term restructuring strategy."

That strategy includes a shift from the low-profit kids video business, formerly EM.TV's core, to the bigger upside potential offered by sports rights and merchandising. But while EM.TV has scored some notable successes -- including an exclusive deal to produce broadcasts of the first and second division German Soccer League matches for pay TV group Arena -- sports has so far also failed to be a golden goal.

EM.TV is hoping that will change in 2007. The company is counting on a loosening of Germany's state monopoly on sports betting to be a money-spinner for sports channel DSF and online group Sport1.

In a conference call with investors and journalists, EM.TV CEO Werner Klatten said the company's sport business was "on the path to growth" and downplayed any risk involved with the sports betting operation.

EM.TV got a vote of confidence last week from one of its main shareholders. Swiss media group Highlight bought up 5.7 million EM.TV shares, increasing its stake in the company to 13% (HR 11/17).

The move could spur more cooperation between the two companies. Highlight is a leading player in the sports rights business and also controls German production/distribution giant Constantin Film.

For the full year 2006, EM.TV said Tuesday it is holding to its earlier forecast, reiterating revenue growth of some 19% to around €250 million ($321 million) and a 40% jump in earnings before interest and tax to €8 million-€10 million ($10 million-$13 million).